Cash crunch, protest turn up pressure on nervous government
udget revenues after projected income for January and February fell far short of figures forecast in the budget, Finance Minister Ihor Mityukov said on Wednesday. 'In January of 1998 the budget received Hr 802.2 million ($404.1 million), or 61.7 percent [of] an expected Hr 1.3 billion,' Mityukov told ministers.
'As of Feb. 16, Hr 370 million went toward the budget, which is about 50 percent of what we had expected for this period,' he said. He did not release expenditure figures. He blamed Hr 360 million of the shortfall on a practice which allows businesses to put off paying their taxes. 'Today an order will be signed requiring local authorities to shorten the deadlines for paying money to the budget,' he said.
Ukraine is aiming for a deficit at 2.5 percent of GDP this year, according to a law signed by President Leonid Kuchma last month. The 1997 deficit reached 6.8 percent of GDP, against the 5.7 percent of GDP forecast in last year's budget.
Ukraine's critical cash shortage was pulled into sharp focus on Thursday as up to 6,000 protesters yelling 'Pay us, pay us' spilled on to the streets of Kyiv demanding the government clear a wage and pension backlog now totaling Hr 5.2 billion ($2.65 billion).
The nationwide protest was organized by trade union officials who urged the government to halt market reforms, which they said were ruining the country's industrial and farming sectors.
'We will act more resolutely if Ukrainian authorities will not defend the constitutional rights of workers,' the protesters said in a resolution.
Miners, teachers and pensioners joined in the protest, which began in front of government and Parliament buildings and ended at the building housing President Kuchma's administration.
'We're not getting paid,' said one miner, who works in one of the hardest-hit sectors in Ukraine's economy. 'The last time we were paid was 12 months ago.'
Miners banged their helmets on the ground in unison in front of the central bank yelling 'Wages, wages' and 'Work, work'. Others carried signs saying 'A hungry miner is Ukraine's shame.'
Ukraine has made occasional efforts to repay its debt of Hr 832 million owed to state-sector workers, pensioners and students.
But the government has put little pressure on former state-sector companies to repay the balance of the wages, often held back for up to a year or paid out to workers in finished products rather than cash.
Organization spokesman Oleksandr Stoyan called on the government to pay Ukrainians with DM 750 million ($412 million) raised from last week's Eurobond issue. 'First of all we want the government to pay off pensions and not to increase communal service rates,' Stoyan told the crowd, referring to government plans to increase costs for electricity and apartments in 1998.
Western economists have repeatedly warned the government of the dangers of relying on foreign borrowing to cover its budget deficit and urged it to quickly push ahead with its stalled privatization drive to raise funds. The government is due to complete a series of laws by the end of the first quarter enabling it to sell the state phone company Ukrtelekom, the company's president said on Thursday.
The privatization of Ukrtelekom is expected to draw foreign buyers to Ukraine, where Soviet-era technology still prevails and where there is only one telephone for every seven or eight people in the country of 50 million. 'A working group has been formed which should get all the paperwork together to be passed by the new Parliament,' said Dmytro Khudoly, referring to parliamentary elections scheduled for March 29.
Khudoly said current Ukrainian laws forbid privatization of the company, which consists of 35 government telecom companies and 738 affiliates.
The government, which said previously that Ukrtelekom's privatization should begin in the first quarter, hopes to privatize the company this year for $4 billion. It has also launched a program to streamline Ukrtelekom and Ukrposhta, the state mail company, by 2005.
